How North Dakota’s Limited Liability Company Act Works

The North Dakota Uniform Limited Liability Company Act, codified as Chapter 10-32.1 of the North Dakota Century Code, is the statute that controls how you form an LLC in the state, how you run it, and how you close it down. It applies to single-member startups and multi-member ventures alike, and it sets the default rules that take over whenever your operating agreement is silent.¹

Under NDCC 10-32.1-09, North Dakota law governs both the internal affairs of every domestic LLC and the personal liability of its members, managers, and governors. That is the liability shield most people form an LLC to get. Creditors of the business can reach the LLC’s assets, but as a general rule they cannot reach your personal savings or property, provided you actually treat the company as a separate entity. The Secretary of State describes the LLC as having “its own rights, privileges, and liabilities distinct from those of its members,” meaning the company can sign contracts, own property, open bank accounts, and sue or be sued in its own name.²

Forming the LLC

You form a North Dakota LLC by filing articles of organization with the Secretary of State and paying a $135 filing fee. Any organizer at least 18 years old can sign. Under NDCC 10-32.1-20, the articles must include:¹

A company name containing “Limited Liability Company,” “LLC,” or “L.L.C.” and distinguishable from other entities on record with the state
A registered agent, either commercial or noncommercial, with a physical North Dakota address
The street address of the principal executive office
The name and address of each organizer

The articles may set an effective date up to 90 days after filing if you want the LLC to come into existence on a future date. Most filings go through the state’s FirstStop online portal. Once the Secretary of State confirms everything meets the statute and the fee is paid, the office issues a certificate of organization.²

North Dakota recognizes four LLC types under the same $135 registration fee: a standard business LLC, a farming or ranching LLC, an authorized livestock farm LLC, and a professional LLC (PLLC) for licensed professionals such as doctors, lawyers, and accountants.²

Choosing How the LLC Is Managed

Every North Dakota LLC is member-managed by default. Under NDCC 10-32.1-39, that default changes only if the operating agreement expressly says the company is “manager-managed” or “board-managed,” or that management is “vested in managers” or “vested in a board,” or uses similar language.³ The three options work like this:

Member-managed. All members share day-to-day authority. This is the default and fits small LLCs where every owner is active.
Manager-managed. One or more designated managers run the business, and non-manager members function more like passive investors.
Board-managed. A board of governors oversees the LLC, similar to a corporate board of directors.

The choice is not just organizational. It decides who owes fiduciary duties and who has authority to bind the company in dealings with third parties.

The Operating Agreement

The operating agreement is the internal rulebook that governs how members relate to one another and to the company. Under NDCC 10-32.1-13, it controls profit distributions, voting rights, management authority, and how the agreement itself gets amended. You do not file it with any state office; it stays private among the members.¹

You have wide freedom to write what you want, but the Act sets limits. An operating agreement cannot:¹

Eliminate the duties of loyalty, care, or other fiduciary obligations, though it may shape them within limits
Eliminate the obligation of good faith and fair dealing
Unreasonably restrict a member’s right to access company information and records
Remove the LLC’s ability to sue or be sued in its own name
Override a court’s power to order dissolution when circumstances justify it

If you have no operating agreement, or the agreement is silent on some point, the default rules in Chapter 10-32.1 fill the gap. The defaults are workable but may not match what you want. A two-member LLC split 50/50 with no operating agreement, for example, has no built-in tiebreaker when the members disagree.

Fiduciary Duties

NDCC 10-32.1-41 imposes three overlapping obligations on anyone running a North Dakota LLC: the duty of loyalty, the duty of care, and the obligation of good faith and fair dealing.¹

The duty of loyalty requires the person managing the LLC to account for any profit or benefit from company activities or property, to avoid dealing with the company on behalf of someone with a competing interest, and to refrain from competing with the company before dissolution. A transaction that would otherwise violate this duty can be authorized or ratified by the members after full disclosure of the material facts, and it is also a defense that the transaction was fair to the company.

The duty of care, subject to the business judgment rule, means acting with the care a reasonable person in a similar position would use and in a way you honestly believe serves the company’s best interests. You can rely in good faith on reports and opinions from people you reasonably believe are competent. Good faith and fair dealing sit on top of everything, requiring conduct that is honest, fair, and reasonable in light of the operating agreement.

Who bears these duties depends on your management structure. In a member-managed LLC, they fall on every member. In a manager-managed LLC, loyalty and care apply only to the managers. In a board-managed LLC, they apply only to the governors. Good faith and fair dealing applies to everyone in every structure.

Annual Report Filing

Every domestic and foreign LLC doing business in North Dakota files an annual report with the Secretary of State. Under NDCC 10-32.1-89, the report must include the company name, the registered agent and office, the principal executive office, a short description of the business, and the names and addresses of all managers, governors, or managing members.¹

The deadline and fee depend on the type of LLC:

Business LLCs: due before November 16 each year, with a $50 fee.²
Farming or ranching LLCs: due by April 15 each year, also $50.

For a newly formed LLC, the first annual report is not due until November 16 of the year after the calendar year your articles took effect. File your articles in March 2026 and your first report is due before November 16, 2027.

Missing the Deadline

Missing the annual report deadline sets off a chain reaction. Under NDCC 10-32.1-90, an LLC that fails to file within six months after the deadline ceases to exist by operation of law. The Secretary of State notes the involuntary termination on the state’s records and mails notice to your last registered agent or principal office. A terminated LLC loses its authority to conduct business and, critically, its liability shield.

Reinstatement

You have one year after involuntary termination to reinstate by filing the past-due annual report and paying the statutory filing, penalty, and reinstatement fees.⁴ Reinstatement returns the company to active status. After one year, the only route back is a petition to the district court in Burleigh County, which can order the Secretary of State to reinstate. You still have to file the past-due report and pay all accumulated fees. A $50 annual report filed on time is far cheaper.

Foreign LLCs Doing Business in North Dakota

An LLC formed in another state that wants to do business in North Dakota must register with the Secretary of State and pay a $135 fee. Registration is generally triggered by having a physical office or employees in the state, collecting sales tax, needing a state license or permit, or being awarded a state contract.²

Not every activity counts as “transacting business.” Under NDCC 10-32.1-82, a foreign LLC does not need to register merely for maintaining bank accounts, holding internal meetings, settling legal disputes, or completing an isolated transaction within 30 days.¹ The line is not always obvious, and the Secretary of State’s office recommends consulting an attorney when in doubt. Once registered, a foreign LLC faces the same $50 annual report and deadline as a domestic LLC. Withdrawing from the state costs $20.

Closing the LLC

Ending a North Dakota LLC happens in two stages: dissolution and winding up. Dissolution does not immediately end the entity. Under NDCC 10-32.1-51, a dissolved LLC continues to exist for the sole purpose of settling its affairs.¹

During winding up, the LLC pays off debts, settles outstanding obligations, and distributes any remaining assets to the members. The company may also preserve the business as a going concern for a reasonable time, pursue or defend lawsuits, transfer property, and resolve disputes through mediation or arbitration. Once those steps are finished, you file articles of dissolution and termination with the Secretary of State for a $20 fee.²

Simply walking away without filing is a costly mistake. An LLC that stops operating without filing dissolution continues to owe annual reports and fees. Eventually the Secretary of State will involuntarily terminate it, but by then you may have years of missed filings and a harder reinstatement path if you ever need to reopen. The $20 dissolution filing avoids all of that.

Tax Treatment

North Dakota does not impose a separate entity-level income tax on LLCs. Income passes through to the members, who report it on their personal state returns. The state generally conforms to federal Internal Revenue Code classifications, so a single-member LLC is treated as a disregarded entity and a multi-member LLC as a partnership, unless the members elect corporate taxation with the IRS.

North Dakota’s individual income tax for 2025 uses a tiered structure. The first portion of taxable income is taxed at 0%, income above that threshold at 1.95%, and income above a higher threshold at 2.50%.⁵ For a single filer, the 0% bracket covers the first $48,475, the 1.95% rate applies from $48,475 to $244,825, and the 2.50% rate applies above $244,825.

If your LLC sells taxable goods, rents lodging, or charges admission to recreational activities, you will need a sales tax permit from the North Dakota Office of State Tax Commissioner. Apply at least 30 days before opening through the state’s ND TAP online portal. Sales tax permits are not transferable, so buying an existing business means applying for a new permit.⁶

1
North Dakota Legislative Branch. North Dakota Century Code 10-32.1 – Uniform Limited Liability Company Act
2
North Dakota Secretary of State. Limited Liability Company (LLC)
3
North Dakota Legislative Branch. North Dakota Code 10-32.1-39
4
North Dakota Secretary of State. Maintain Registration
5
North Dakota Office of State Tax Commissioner. Individual Income Tax
6
North Dakota Office of State Tax Commissioner. Sales and Use Tax